Service Sectors in Malaysia

1. INTRODUCTION

Services sector in Malaysia has played an important role in the growth and development process of the economy. The greater presence of the services sector in the Malaysian economy is indeed in line with the growth transformation that has taken place in many of the developed economies in which the services sector forms a major structural component of the economy compared to that of the manufacturing or primary sector. With the greater role of the services sector over the years, Malaysia has moved into the third stage of economic development, whereby the economic growth is powered by both the manufacturing and services sectors. Under the Third Industrial Master Plan (IMP3), 2006-2020, the Government has targeted the service sector to register an annual growth rate of 7.5 per cent per annum and to contribute 59.7%[1] to Gross Domestic Product (GDP)[2] by 2020, from the current 50%. Thus, given the increasing role of services sector in Malaysia, this article aims to; (1) consolidate the development of service sectors in Malaysia since independence in 1957; (2) reasons to increasing services sectors towards achieving a developed status by 2020; (3) targeted service sectors in Malaysia and distribution in various states in Malaysia; and (4) Issues facing Malaysia in increasing services sectors. These issues would be analysed along the 10 Operations Management critical decision areas.

2. DEVELOPMENT OF SERVICES SECTOR IN MALAYSIA

The contribution of services sector to GDP of Malaysia has grown steadily over the years. Limited literatures were available on development of services sectors prior to 1980s. The development of services sector is as follows:-

1) 1957-1980: The initial service generated was meant for domestic consumption. The service sector only contributed to 40.1% of GDP.

2) 1980-2005: Services sector grew by 8.3% per year, versus manufacturing 9.1% per year. Growth in the services sector this period exceeded the GDP growth of...